Build a product and service catalog: units, categories, tax

A product and service catalog is the list of what you sell, each entry with a name, a type, a unit of measure, a category, a list price and a tax rate. Set it up once and every invoice line starts from the same facts instead of retyped text.

Without a catalog, the same service turns up on invoices as "Consulting", "Advice (hourly)" and "Strategy session", at three slightly different prices. Reports stop adding up and customers ask questions. A catalog fixes that with one entry per thing you sell, described once.

What every catalog entry needs

A short code (often called an SKU) helps too. It stays the same when you rename an entry, so it is the safest way to refer to an item in a spreadsheet or a conversation with your accountant.

Products and services are not the same

Goods are usually sold by the piece, by weight, by length or by volume. Services are usually sold by time (hours, days) or by the job. Keeping the type on each entry pays off later: in many countries, goods and services can be taxed differently, and the difference matters when you sell across borders.

Name services by the outcome the customer buys ("Monthly website maintenance") rather than by the internal task ("WP updates"). Name products the way they appear on your supplier's paperwork plus anything your customers need to tell them apart, such as size or color.

Choosing units of measure

• Use the unit you invoice in. If you bill consulting by the hour, the unit is the hour, even if you plan the work in days.
• Pick one unit per entry. If you sell the same thing by the hour and as a fixed package, make two entries.
• Keep the list short. Hour, day, piece and one or two physical units cover most small businesses.

Categories that help instead of hinder

Categories are for finding things and for reporting. Two levels at most is plenty for a small catalog: think "Design", "Development", "Support", "Hardware". If a category holds one entry, it is probably not needed. If you keep scrolling inside one, split it.

Tax rates on items

In many countries, the tax rate depends on what you sell, and sometimes on who buys it and where. Many VAT systems have a standard rate, one or more reduced rates and some exemptions. Storing the usual rate on each item means a person checks it once instead of on every invoice. Rates and rules differ by country and change over time, so confirm yours with your accountant or tax office. When an invoice carries more than one rate, our guide to showing VAT per rate on an invoice explains how to present it.

Setting up your catalog in Swiftly Workspace

In Swiftly Workspace, products and services are items. You find them under Finance, then Items, on iPhone, iPad and Mac. On a Mac, click Add Item to create one.

• The form starts lean. A new company sees Name, Item Type, Status, SKU, Description, Categories, Base Unit of Measure and List Price, among a few others. Name and Item Type are locked on the form, and every item needs a name.
• Types, units and categories are your own lists. The item types a new company starts with include Physical Product and Service. Units of measure, item categories and tax rates live under Administration, then Reference Data, in Units of Measure, Categories and Tax Rates. An item can sit in more than one category.
• Add the tax rate to the item. Default Tax Rate starts hidden. An admin can show it under Configure, then Item, by ticking Visible. Our guide to configuring your forms covers how that table works.

When you add a line to an invoice and pick an item, the line takes the item's List Price as its unit price. On a Mac it also takes the item's Default Tax Rate; on iPhone and iPad you choose the rate on the line. Either way, you can still change both before you save the line. How to create an invoice on Mac walks through the whole flow.

Keeping the catalog tidy

• Review it twice a year. Retire what you no longer sell instead of letting old entries clutter the search.
• Change prices on the item. Not on each invoice, unless the deal really is a one-off.
• Agree special prices separately. If some customers pay a different rate, keep the list price as the standard and handle the exceptions on purpose; see pricing for specific customers.
• Start from what you have. Bringing an existing price list in? See preparing a CSV for import.

A catalog is one part of a bigger picture. If you are still deciding what your customer system needs, start with CRM for small service businesses. And if you sell physical goods, getting them to your customers is a planning job of its own, covered in our guide to planning how goods reach your customers.

Frequently asked questions

Do services need a unit of measure?

Yes. A unit tells the customer what the quantity on the line means. For time-based work that is usually the hour or the day; for a fixed-scope job, a unit such as "job" or "package" keeps a quantity of one easy to read.

What is an SKU, and does a service business need one?

An SKU is a short code that identifies one entry in your catalog. A service business does not strictly need one, but a code that never changes makes spreadsheets, price updates and conversations with your accountant easier.

How many categories should a small catalog have?

Enough that each one holds a handful of entries, and few enough to fit on one screen. For most small businesses that means somewhere between three and ten categories, in one or two levels.